Utility computing services catching on

In some ways, manufacturer Rockwell Collins is an ideal customer for HP's powerful Superdome computers. The maker of avionics and communications systems needs the sort of processing power that the Unix-based machines deliver to handle its engineering, ERP and product development applications, some of which require half-second response times.

The problem, though, is that the Cedar Rapids, Iowa, company needs four of the 128-processor systems, and with starting prices of $300,000 per unit, that's more than Rockwell Collins wants to spend.

The solution? Rockwell Collins has signed on for a pay-as-you-go offering that lets it house four of the machines in its own data center without buying the systems. Rather, HP enters the network through a secure connection once a month to measure average CPU utilization and charges the company accordingly. (Rockwell Collins would not discuss financial details.)

"We wanted the ability to rapidly scale up or down to meet our business demand and to turn a fixed cost into a variable cost," says Jed Young, director of enterprise services of Eastern regions for Rockwell Collins, which has a similar deal with EMC for storage disk space. "Paying HP for that usage eliminates any overhead or unused capacity."

Pay-as-you-go services offer a glimpse into the utility computing world that HP, IBM, Sun and others envision and that they started to promote a few years ago. Utility computing services give companies a way to start exploiting new technologies before all the pieces of an ideal system for automating data centers are deliverable.

Utility computing services apply to software and hardware.

"From a licensing perspective, there has been much pushback from customers over hefty upfront charges or paying maintenance for unimplemented technology," wrote Jason Maynard, a software analyst at Merrill Lynch, in a recent report.

For Steve Evans, vice president of information systems for PGATour.com, in Ponte Vedra Beach, Fla., cost concerns dominated his decision to partner with IBM to host the organization's TourCast application. The program gives Web site visitors play-by-play statistics, weather conditions and other up-to-the-minute golf tournament data.

While the application initially piqued his bosses' interest, Evans didn't have the go-ahead to buy the infrastructure needed to support it. PGATour.com wanted proof that the application would earn at least as much money as it cost to get it off the ground.

Evans started talking to IBM in June 2002 about adopting the company's on-demand model, which he says enabled him to scale up the application in correlation with the number of subscribers on an ongoing basis. TourCast, which costs subscribers $10 per month, rolled out in February 2003. IBM hosts the application at a Boulder, Colo., data center on a mainframe that is partitioned into instances of Linux virtual machines.

The application is updated with data input by collectors at PGA tour events and by PGATour.com staffers in Florida.